malversation

8/10/2019 Malversation

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The elements of malversation of public funds are:

1.

that the offender is a public officer;

2.

that he had the custody or control of funds or property by reason of the duties

of his office;

3.

that those funds or property were public funds or property for which he was

accountable; and

4.

that he appropriated, took, misappropriated or consented or, through

abandonment or negligence, permitted another person to take them.49

There is no dispute on the existence of the first three elements; petitioner admitted having

received the cash advances for which he is accountable. As to the element of misappropriation, indeed

petitioner failed to rebut the legal presumptionthat he had misappropriated the said public funds to hispersonal use, notwithstanding his unsubstantiated claim that he has in his possession liquidation

documents. The SB therefore committed neither reversible error nor grave abuse of discretion in

convicting the petitioner of malversation for failure to explain or account for his cash shortage by any

liquidation or supporting documents. As this Court similarly ruled in one case50

:

In the crime of malversation, all that is necessary for conviction is sufficient proof that the

accountable officer had received public funds, that he did not have them in his possession when

demand therefor was made, and that he could not satisfactorily explain his failure to do so. Direct

evidence of personal misappropriation by the accused is hardly necessary as long as the accused cannot

explain satisfactorily the shortage in his accounts.

In convicting petitioner, the Sandiganbayan cites the presumption in Article 217, supra, of the

Revised Penal Code, i.e., the failure of a public officer to have duly forthcoming any public funds or

property with which he is chargeable, upon demand by any duly authorized officer, isprima

facieevidence that he has put such missing fund or property to personal uses. The presumption is, of

course, rebuttable. Accordingly, if the accused is able to present adequate evidence that can nullify any

likelihood that he had put the funds or property to personal use, then that presumption would be at an

end and theprima faciecase is effectively negated. This Court has repeatedly said that when the

absence of funds is not due to the personal use thereof by the accused, the presumption is completely

destroyed; in fact, the presumption is never deemed to have existed at all. In this case, however,

petitioner failed to overcome thisprima facieevidence of guilt.

Art. 203. Who are public officers.

For the purpose of applying the provisions of this and the preceding titles of this book, any person

who, by direct provision of the law, popular election or appointment by competent authority, shall take

part in the performance of public functions in the Government of the Philippine Islands, of shall perform

in said Government or in any of its branches public duties as an employee, agent or subordinate official,

of any rank or class, shall be deemed to be a public officer.

MALVERSATION OF PUBLIC FUNDS OR PROPERTY

Art. 217. Malversation of public funds or property; Presumption of malversation.

Any public officer who, by reason of the duties of his office, is accountable for public funds or

property, shall appropriate the same or shall take or misappropriate or shall consent, throughabandonment or negligence, shall permit any other person to take such public funds, or property,

wholly or partially, or shall otherwise be guilty of the misappropriation or malversation of such funds or

property, shall suffer:

1. The penalty of prision correccional in its medium and maximum periods, if the amount involved in the

misappropriation or malversation does not exceed two hundred pesos.

2. The penalty of prision mayor in its minimum and medium periods, if the amount involved is more

than two hundred pesos but does not exceed six thousand pesos.
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3. The penalty of prision mayor in its maximum period to reclusion temporal in its minimum period, if

the amount involved is more than six thousand pesos but is less than twelve thousand pesos.

4. The penalty of reclusion temporal, in its medium and maximum periods, if the amount involved is

more than twelve thousand pesos but is less than twenty-two thousand pesos.

If the amount exceeds the latter, the penalty shall be reclusion temporal in its maximum period to

reclusion perpetua.

In all cases, persons guilty of malversation shall also suffer the penalty of perpetual special

disqualification and a fine equal to the amount of the funds malversed or equal to the total value of the

property embezzled.

The failure of a public officer to have duly forthcoming any public funds or property with which he is

chargeable, upon demand by any duly authorized officer, shall be prima facie evidence that he has put

such missing funds or property to personal use. (As amended by RA 1060).

What is Malversation of Funds?

Sunday, March 05, 2006

http://www.lawstude.net/2005/12/malversation.html

Malversation

Final point on the crime of malversation: Although the crime of intentional malversation includes

malversation committed through negligence, or {rather than neglect of duties}, the crime of technical

malversation is not necessarily included in the crime of simple malversation. So if a public officer was

charged for simple malversation under Article 217 of the Code, but during the trial, the evidence shows

that the missing fund or property was applied to public use, and the crime therefore would be technical

malversation, the trial court should then suspend the proceedings, and require the prosecutor to file the

proper information for technical malversation. Otherwise, if the trial court will proceed and then render

judgment against the accused for technical malversation, the judgment is null and void. The

constitutional right of the accused to be informed of the nature and cause of the accusation against him

will be violated. This is so because the evidence required for conviction in simple malversation is

materially different from the evidence required in technical malversation.

Where the prosecutor therefore had adduced evidence to show that the missing fund supposedly

misappropriated by the Accused where in fact applied to public use and thus bring about liability for

technical malversation under Article 220 of the RPC, the court should suspend the proceedings and

direct the prosecutor to file the proper information for technical malversation.

Where the Accused is in custody, he should not be discharged and set possibly on bail. The original

information should not be dismissed until the proper information for technical malversation has been

filed. The accused must be re-arraigned for the new information, and his plea thereto must be taken

down. The prosecutor and the defense may then stipulate that the evidence already adduced under theoriginal information shall be re-offered as the same evidence in support of the technical malversation. In

other words, it is not necessary that the evidence be adduced all over again. Whatever evidences have

been taken may by stipulation between the prosecution and the defense counsel be considered as the

same evidence presented for the case of technical malversation. Only thereafter may the court render a

valid judgment finding the Accused guilty of technical malversation. THIS IS THE PROCEDURAL ASPECT IN

A CASE WHERE THE OFFICIAL CHARGED FOR CRIME OF SIMPLE MALVERSATION under Article 220 - that

the court where the trial of the accused is pending would show that the fund or property that was

missing was not misappropriated for his private use or benefit that would show that this was applied to

some other public purpose. So the crime being established by evidence --- Malversation under Article

220 which is the misappropriation of the public fund or property. In such a case, the court will not have

jurisdiction over the crime because that is not necessarily included in the information for simplemalversation. It is entirely new accusation before the trial court to suspend the proceeding require the

prosecution to file the proper information for technical malversation. This is the proper procedure that

should be adopted, not for the court to receive with the trial. This is exactly the subject of a bar problem

sometime in 1986 or before that, about a crime charged for simple malversation but in the course of the

trial, what was proven was technical malversation, and the trial court proceeded to convict the accused

on this ground. SC ruled the sentence is null and void.


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Under Article 217 on malversation, you have here a presumption that the public officer accountable for

the missing fund or property has misappropriated the same IF he could not have the fund or property

forthcoming after due demand therefore be made. The presumption arises that he had misappropriated

the missing fund or property, hence a case of malversation.

The constitutionality of this presumption has been assailed several times, and the SC upheld the

constitutionality of the provision. It does not really shift the burden upon the defense to prove that he is

{indeed} innocent. The presumption merely calls on the public officer accountable for the missing fund

or property to explain what happened thereto. Only if he could not explain would the presumption arise

that he had used it for his own private benefit or gain.

Now you get this clear: the presumption DOES NOT ARISE from the mere fact that there was a shortage

in the accountability of the public officer. The presumption does not arise from the mere fact that there

were funds or property that turned out to be unaccounted for. Before the presumption would arise, it

must indubitably shown by proper audit or evidence that the funds or property demanded has not been

used for any other government purpose since it may simply be a shortage resulting from inaccurate

accounting. So the evidence must show that the missing fund or property should be in the custody of

the public officer accountable therefore, but he cannot explain what happen thereto.

If therefore, the public officer accountable for the fund or property had so many accounts, an audit

should be conducted of all the accounts. The audit must be complete. A partial audit will not bring about

the presumption. The audit must be COMPLETE. It must be THOROUGH, and unquestionably RELIABLE &

TRUSTWORTHY.

When there is doubt as to the findings of the auditor, the public officer accused for malversation can

only be convicted on the basis of DIRECT evidence of malversation, not on mere presumption.

So if the public officer accountable for the government funds or property had procured using public

fund. He had his office in the city, and he has also somebody stationed in the field where it is beingincurred by the others. An audit of his account in the city will not be the basis for the presumption to

arise that certain city funds which he could not account for has been misappropriated. In this situation,

SC said, What may not be shown by the records in the city, they be in the various station where the

accused is also there. So an audit must be conducted also in the various offices. So unless the audit is

complete, there can be no conviction indubitably showing that the accused had suffered some falsity in

his accountabilities. High court: Malversation is a crime for wilfull consequences, and so it cannot be

taken lightly because the accused here if convicted would be forever barred from employment in the

government, aside from the heavy penalty for the crime involved. {Let this be your guide in invoking this

crime} The mere fact that the only audit would show shortage does not bring the presumption that the

PO accountable therefore had applied this to his private use or benefit.

Only an accounting audit would establish beyond doubt that the said public property that he has use to

that he cannot explain where it was or what happened there. Only then will the presumption arise

because only that public officer can explain what happened to the fund or property under his

accountability. If that is not the situation, the direct evidence of malversation is necessary.

*Now under this crime, you have instances where private citizen may incur the crime of Malversation.

The Instances are:

1) when the private citizen conspires with the public officer committing malversation;

2) when private citizen cooperates as an accomplice or accessory to a public officer committing

malversation;

3) when a private citizen has been named the recipient in whatever capacity of funds or propertiesaccountable to the government, and such private citizen misappropriated the same, whether the fund

or property belong to the local government or national government;

4) when the private citizen is constituted as an administrator or depositary of funds or property that has

been seized, attached, or deposited by public authorities, even though that funds or property belong to

a private individual. {You have this clear provsion in Article 222}


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Get it clear that even though the fund or property involved belongs to a private

citizen,for as long the public officer or person in custody thereof is under obligation in law to account for

those funds or property to the government, any misappropriation thereof will bring about the crime of

malversation, not the crime of theft or estafa. So I emphasize to you last time that the crime of

malversation is prosecuted on the relation of the offender to the fund or property involved --- he must

be the one accountable therefore, otherwise, he cannot commit the crime of malversation.

CIRCULAR NO. 499

Series of 2005

Subject : Audit Committee and Internal Audit Function

Pursuant to Monetary Board Resolution No. 1447 dated 10 November 2005, the Manual of Regulations

for Banks (MORB) and the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) arehereby amended, as follows:

Section 1. Section X164 and its subsections are hereby amended to read, as follows:

Section X164. Internal Audit Function. Internal audit is an independent, objective assurance and

consulting function established to examine, evaluate and improve the effectiveness of risk management,

internal control, and governance processes of an organization.

Subsec. X164.1 Status. The internal audit function must be independent of the activities audited and

from day-to-day internal control process. It must be free to report audit results, findings, opinions,

appraisals and other information to the appropriate level of management. It shall have authority to

directly access and communicate with any officer or employee, to examine any activity or entity of the

institution, as well as to access any records, files or data whenever relevant to the exercise of its

assignment. The Audit Committee or senior management should take all necessary measures to provide

the appropriate resources and staffing that would enable internal audit to achieve its objectives.

Subsec. X164.2 Scope. The scope of internal audit shall include:

a.

Examination and evaluation of the adequacy and effectiveness of the internal control systems;

b.

Review of the application and effectiveness of risk management procedures and risk assessment

methodologies;

c.

Review of the management and financial information systems, including the electronic

information system and electronic banking services;

d.

Assessment of the accuracy and reliability of the accounting system and of the resulting financial

reports;

e.

Review of the systems and procedures of safeguarding assets;

f.

Review of the system of assessing capital in relation to the estimate of organizational risk;

g.

Transaction testing and assessment of specific internal control procedures; and

h.

Review of the compliance system and the implementation of established policies and

procedures.

Subsec. X164.3 Qualification Standards of the Internal Auditor


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The internal auditor of a universal bank or a commercial bank must be a Certified Public Accountant

(CPA) and must have at least five (5) years experience in the regular audit (internal or external) of a

universal or commercial bank as auditor-in-charge, senior auditor or audit manager. He must possess

the knowledge, skills, and other competencies to examine all areas in which the institution operates.

Professional competence as well as continuing training and education shall be required to face up to theincreasing complexity and diversity of the institutions operations.

The internal auditor of a thrift bank, quasi-bank, trust entity or national cooperative bank must be a CPA

with at least five (5) years experience in the regular audit (internal or external) of a thrift bank, quasi-

bank, trust entity or national cooperative bank as auditor-in-charge, senior auditor or audit manager or,

in lieu thereof, at least three (3) years experience in the regular audit (internal or external) of a

universal bank or commercial bank as auditor-in-charge, senior auditor or audit manager.

The internal auditor of a rural bank, NSSLA or local cooperative bank must be at least an Accounting

graduate with two (2) years experience in external audit or in the regular audit of a rural bank, NSSLA or

local cooperative bank or, in lieu thereof, at least one (1) year experience in the regular audit (internal

or external) of a universal bank, commercial bank, thrift bank, quasi-bank, trust entity or national

cooperative bank as auditor-in-charge, senior auditor or audit manager.

A qualified internal auditor of a universal bank or a commercial bank shall be qualified to audit thrift

banks, quasi-banks, trust entities, national cooperative banks, rural banks, non-stock savings and loan

associations (NSSLAs), local cooperative banks, subsidiaries and affiliates engaged in allied activities, and

other financial institutions under BSP supervision.

A qualified internal auditor of a thrift bank or national cooperative bank shall likewise be qualified to

audit quasi-banks, trust entities, rural banks, NSSLAs, local cooperative banks, subsidiaries and affiliates

engaged in allied activities, and other financial institutions under BSP supervision.

The internal auditor should conform with the Code of Professional Ethics for Certified Public

Accountants and ensure compliance with sound internal auditing standards, such as the Institute of

Internal Auditors International Standards for the Professional Practice of Internal Auditing (e-

mail:[email protected];Web:http://www.theiia.org.) and other supplemental standards issued by

regulatory authorities/government agencies. The Standards address independence and objectivity,

professional proficiency, scope of work, performance of audit work, management of internal audit,

quality assurance reviews, communication and monitoring of results.

Section 2. Another paragraph is hereby added to Subsec. X141.3.c(9)(a) of the MORB and Subsec.

4141Q.3.c(9)(a) of the MORNBFI on Audit Committee to read, as follows:

The Audit Committee shall establish and maintain mechanisms by which officers and staff may, in

confidence, raise concerns about possible improprieties or malpractices in matters of financial reporting,

internal control, auditing or other issues to persons or entities that have the power to take corrective

action. It shall ensure that arrangements are in place for the independent investigation, appropriate

follow-up action, and subsequent resolution of complaints.

Section 3. Section X164 on Audited Financial Statements of Banks is hereby renumbered as Section

X166; Section X165 on Bank Protection is hereby renumbered as Section X171; Section X180 on
mailto:[email protected]:[email protected]:[email protected]://www.theiia.org/http://www.theiia.org/http://www.theiia.org/http://www.theiia.org/mailto:[email protected]


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Selection, Appointment, and Reporting Requirements for External Auditors; Sanction; Effectivity is

hereby renumbered Section X165 and Section X166 on Place of Board of Directors Meeting is hereby

renumbered as Subsec. X141.5.

Section 4. The foregoing amendments under Section 1 are hereby adopted as amendments to the Q-Regulations, N-Regulations and S-Regulations of the MORNBFI.

This Circular shall take effect fifteen (15) days following its publication either in the Official Gazette or in

a newspaper of general circulation.

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